Czech economy

Czechs are fiercely proud of their beer, and especially of the fast-growing range of varieties available from the explosion of independent craft and micro-breweries established in recent years in both Prague and the country’s many spa and historic towns, as an FT special report shows.

Indeed, the boom in innovative, independent brewing is being felt well outside the tourist-packed streets of old town Prague and Cesky Krumlov.

Sixty miles to the south-east of the Czech capital is Pacov, a small town in rolling hills that fails to make the tourist radar screen. But a factory on its southern fringes knows all about the current rage among restaurateurs for making hoppy Czech ales on site. Read more

Economic growth in emerging Europe surged in the first quarter as Germany’s dynamism drove manufacturing output and fears of that the Ukraine crisis would exert a damping did not materialise, data announced on Thursday showed.

“In spite of fears of spillovers from the crisis in Ukraine, there are no signs (so far a least) that this has affected the recovery in Central and South Eastern Europe,” said William Jackson, emerging markets economist at Capital Economics in London.

Four out of six emerging European countries to report preliminary GDP growth data showed a significant expansion in the first quarter year-on-year (see chart). Hungary, Poland, Slovakia and the Czech Republic posted an acceleration in GDP growth, while Romania and Bulgaria slipped back. Read more

For most people becoming finance minister is a huge professional promotion – for Andrej Babis, whose fertiliser-to-media empire has made him the Czech Republic’s second wealthiest man, it will mark a bit of a comedown.

Under a preliminary agreement to create a new coalition government, Babis looks set to take over the finance ministry, one of his demands to bring his newly formed Ano party into the government. Read more

The Czech koruna plunged on Thursday after the country’s central bank surprised markets by declaring a Swiss-style policy of currency market interventions to keep the koruna near Kc27 to the euro compared to Kc25.8 prior to the announcement.

The koruna fell by more than 4 per cent, to just below the 27 to the euro mark set by the bank. Read more

Czech elections created a confusing mess, with no party – or even grouping of two parties – able to command a majority in the country’s 200-member parliament, but the prospect of a long political stalemate is leaving most analysts unruffled. Read more

There was not a lot of public regret about the recent defenestration of the centre-right government of outgoing Czech premier Petr Necas in a sex-and-spying scandal. One reason is that his austerity policies are blamed for sinking the country into its longest-running recession – one that began in the third quarter of 2011.

The new caretaker administration of Jiri Rusnok aims to change that. But it may find it hard to do anything of substance. Read more

At least on the surface the Czech GDP figures for the first quarter confirmed the bad news – it was the worst quarter since 2009 and a poor performance compared to other economies in the CEE region.

The Czech Statistical Office said GDP fell 2.2 per cent year-on-year and by 1.1 per cent compared to the previous quarter. The result was worse than estimate of a 1.9 per cent annual contraction released last month. Read more

Terrible news out of Poland on Thursday morning as Polish manufacturing showed signs of a steepening downturn, posting the worst results since the depths of the first wave of the economic crisis in 2009.

Not much of a surprise that fourth quarter Czech GDP numbers were bad. Released on Monday, they showed an annual contraction of 1.7 per cent – but for CEE bulls there are some signs that the trend may be changing.

The first was that household consumption showed a few faint signs of life, expanding by an annual 0.9 per cent in the final quarter after falling for the first three quarters of the year. Read more

But disappointing though that is for a country that has boasted of its ability to ride the post-2007 global crisis, it was slightly more than the consensus forecast of 0.9 per cent. And new purchasing managers index numbers from central Europe released on Friday also suggest the region is doing a bit better than before, thanks largely to a pick-up in Germany, the biggest export market. Read more

The Czech president-elect does not have much direct power over his country’s economic policy – except for nominating members of the Czech National bank responsible for setting interest rates (the first seat there comes free only in 2014) – but his victory in last weekend’s elections does have implications for business. Read more

The New Year has brought more bad news for the moribund Czech economy – new figures released on Monday show industrial production declining in November by even more than analysts expected, dropping by an annual 3.9 per cent (the consensus forecast had been for a decline of only 1.2 per cent).

While that was bad news, when adjusted for working days, the figures were even worse, showing a fall in industrial production of 6.2 per cent compared to a 3.2 per cent decline in October. Read more

The Czechs have become regional specialists in drawn-out and inconclusive political crises, the latest iteration of which saw premier Petr Necas (left) on Wednesday push through a controversial tax increase that was also a vote of confidence in his coalition government. Read more

The Czech central bank on Thursday cut its policy rate from 0.25 per cent to 0.05 per cent, in a move that took observers by surprise and weakened the currency by a notch.

With Japan and Switzerland on zero, and Singapore on 0.01 per cent, it’s not the world’s lowest rate. Nor even the lowest in the EU, with Bulgaria on 0.03 per cent. But at these levels, we are splitting hairs. As Czech central bank governor Miroslav Singer said, Prague is on “a technical zero”. Read more

The Czech coalition government managed to see off a confidence vote in parliament on Wednesday evening, but a perfect storm of sleaze, voter unpopularity, political infighting and a weak economy promises to make the remainder of its term in office a struggle.

The three-party, centre-right coalition held ranks long enough to defeat a parliamentary no-confidence motion, its fourth in less than two years, called by the opposition Social Democrats. The opposition required 101 votes in the 200-seat lower house to topple the government, but managed only 89. Read more

If the world of central bank interest policy were a dance contest, the Czech National Bank would easily be out-limboing the European Central Bank as the Czechs on Thursday cut their benchmark interest rate by 25 basis points to a record low of 0.5 per cent.

That sticks with a long-running policy of keeping rates below those of the ECB, whose benchmark rate is 1 per cent – although a recent Reuters poll found that 48 out of 71 analysts tipped the ECB to cut rates next week, most of them forecast a 25 basis point cut to 0.75 per cent. Read more